Driven by desire to own an Audi or Mercedes, the upwardly mobile Indian middle class is increasingly headed for the ‘affordable’ pre-owned luxury four-wheelers.

Priced at almost half of that of new ones, the demand for second hand luxury cars has been growing at 20-30 per cent on a year-on-year basis, said industry experts.

The average price of a new luxury car ranges anywhere between Rs 30 lakh and Rs 50 lakh, while the same in used car segment commands a price of around Rs 17-25 lakh, sources said.

Good Supply

“A typical luxury car owner changes his car every 2 years on an average and hence supply of cars is good. This is also complimented by a new set of emerging buyers who want to enjoy these cars but don’t want to spend as much as a new car,” Pavan Shetty, Head of Operations, Lamborghini India, said in an e-mail response to Business Line.

Estimated at nearly 18,000-20,000 units per annum at present, the luxury car market for pre-owned segment is set to grow significantly in coming years, said Eberhard Kern, Managing Director and CEO, Mercedes-Benz India.

Sale of new luxury cars in India grew by 26 per cent to 29,000 units in 2012 compared with 2011. The leasing option rolled out by manufacturers such as BMW and Mercedes would also add to the inventory in the pre-owned vehicles segment.

Advantages

The duty structure has made new cars in luxury segment increasingly expensive. This has also indirectly helped push up sales of used cars, Shetty said.

Budget 2013 announced a 3 percentage point increase in excise duty on SUVs (sports utility vehicles) to 30 per cent and customs duty on luxury cars to be increased to 100 per cent from 75 per cent.

“Pre-owned cars in the luxury segment typically come with manufacturer-backed warranty and are usually refurbished by dealers. Moreover, availability of finance is yet another factor in pushing up sales in the segment,” said Devjyoti Patnaik, Managing Director of Audi Bhubaneswar.

Audi India, which rolled out its pre-owned car programme in December 2012, expects to sell nearly 700 vehicles by the end of this year, said Michael Perschke, Head of Audi India. “We are currently present in the pre-owned segment in 3 centres. We plan to increase it to 10 by the end of this year,” he said.

Mercedes-Benz’s pre-owned cars programme - Proven Exclusivity - witnessed a strong double digit growth last year. “In 2013 we expect to clock strong double digit growth. On an average we sell close to 100 units a month,” Kern said.

BMW India has 10 exclusive BMW Premium Selection showrooms for its pre-owned cars across the country. “All BMW Premium Selection vehicles go through a comprehensive 360 degree check and are completely refurbished technically and visually. Apart from the exclusive environment, professional service and impeccable quality standards, BMW Premium Selection makes the purchase of pre-owned cars effortless with attractive finance options,” said Philipp von Sahr, President of BMW Group India.

shobha.roy@thehindu.co.in

(This article was published on May 29, 2013)
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